Former Vice President Atiku Abubakar is proposing a policy that his political allies say could bring petrol prices down to between ₦400 and ₦500 per litre if he becomes Nigeria’s president in 2027.

On September 28, 2026, former Senator Dino Melaye publicly suggested that Atiku’s proposed fuel subsidy arrangement could reduce petrol prices to that range. Earlier, Atiku’s spokesperson, Phrank Shaibu, had outlined a production subsidy framework intended to make locally refined petrol more affordable.

But how does Atiku intend to achieve this, and can the economics support the ambition?

Unlike Nigeria’s previous fuel import subsidy regime, Atiku proposes targeted government support for domestic refining. Under the arrangement, qualifying Nigerian refineries could access crude oil at preferential prices, reducing production costs and potentially enabling them to sell petrol more cheaply.

His team has clarified that the proposed intervention would be capped, transparently budgeted and independently audited, with measurable conditions for its eventual withdrawal rather than a predetermined expiration date.

The proposal has generated understandable controversy, particularly over its fiscal implications. However, one important dimension has received insufficient attention: crude oil does not produce petrol alone.

When a barrel of crude oil is refined, it yields several commercially valuable products, including petrol, diesel, aviation fuel, liquefied petroleum gas, naphtha and other petroleum derivatives. These products command different market prices and contribute collectively to refinery revenue.

This is where the economic debate requires greater sophistication.

Some assessments calculate the potential subsidy burden by subtracting the proposed ₦500 petrol price from the prevailing pump price and multiplying the difference by national daily consumption. While this illustrates the scale of possible consumer savings, it does not necessarily represent the actual cost of Atiku’s proposed production subsidy.

A proper financial assessment must consider the entire refining process: crude acquisition costs, product yields, revenue from petrol and other derivatives, operating expenses, financing, transportation and distribution.

For example, a refinery selling petrol at a reduced margin could still generate significant revenue from diesel, aviation fuel and other products. Depending on prevailing market conditions and operating efficiency, these combined revenues could improve the commercial viability of lower petrol prices.

However, this does not mean that other refined products automatically subsidise petrol or that a refinery can indefinitely sell below its total cost of production. The commercial value of the entire product mix must be measured against the full cost of refining.

Equally important, a government discount on crude oil is not free. Crude supplied below its market value represents revenue forgone by the federation, with potential consequences for federal, state and local government finances.

The Tinubu administration and the APC Presidential Campaign Council have raised legitimate questions about the proposal’s funding, implementation and compatibility with the Petroleum Industry Act, particularly provisions supporting market-determined petroleum prices.

These concerns deserve answers. So does the question of how government would ensure that any financial support granted to refineries translates into lower pump prices rather than simply improving refinery profit margins.

Atiku, for his part, has maintained that his proposal would not compel private refineries to operate at a loss. He argues that reducing production costs through transparent support would enable cheaper domestic fuel while encouraging investment, employment and industrial development.

The debate has gained additional relevance following the Federal Government’s recently announced 30-day petrol discount arrangement at NNPC retail stations. Atiku has criticised the temporary measure, arguing that Nigerians require lasting relief rather than short-term price reductions.

Beyond the political exchanges, Nigeria must confront a fundamental economic question: how can an oil-producing nation leverage its crude resources and expanding domestic refining capacity to deliver affordable energy without undermining public finances?

The answer requires more than promises or outright rejection.

Atiku’s economic team should publish a comprehensive financial model showing the proposed crude discount, anticipated refinery product yields, expected revenue from petroleum derivatives, fiscal exposure, consumer price transmission mechanism and safeguards against diversion or abuse.

Such transparency would allow economists, industry operators and citizens to assess the proposal on its merits.

Nigeria’s petroleum debate must move beyond the narrow argument of subsidy removal versus subsidy restoration. The real opportunity lies in developing a competitive domestic refining industry that maximises the economic value of every barrel of crude while protecting consumers and public revenue.

₦500 petrol should neither be dismissed as impossible nor accepted as inevitable. Its feasibility must be established through transparent calculations, sound policy design and credible implementation mechanisms.

Ultimately, Nigerians deserve more than an attractive pump-price promise. They deserve an energy policy that is affordable, economically defensible and sustainable.

And that conversation must begin by recognising that the value of a barrel of Nigerian crude extends far beyond the petrol it produces.

Abdulkezo Ikonallah
Public Affairs Analyst, PR Specialist and New Media Consultant